Ruxandra Murariu-Boatca of Rahman Ravelli detail lawyers of the Paris and Brussels Bars’ recent challenge to the EU Council’s limitations on EU lawyers’ activity.
Thus far, the Council of the European Union (the EU Council) has introduced nine packages of economic and individual sanctions1 covering a great variety of sectoral restrictions aimed at isolating Russia following its illegal invasion of Ukraine. The latest one was adopted on 16th December 2022. The eighth package of EU sanctions, introduced on 6th October 2022, is subject to a challenge brought forward by the lawyers of the Paris and Brussels Bars before the General Court of the Court Justice of the European Union (General Court) because of the significant restrictions it imposes on lawyers’ ability to represent Russian clients going forward.
Within the legislative framework incorporating the nine sanctions packages, at Article 5n of Council Regulation (EU) No. 833/2014 of 31 July 2014, as amended (the EU Regulation No. 833/2014), the EU Council widened the scope of services that can no longer be provided to the Government of Russia or to legal persons, entities or bodies established in Russia. As of date, Article 5n of EU Regulation No. 833/2014 essentially prohibits providing, directly or indirectly, a comprehensive list of services, comprising notably “accounting, auditing, including statutory audit, bookkeeping or tax consulting services, or business and management consulting or public relations services”; “architectural and engineering services, legal advisory services and IT consultancy services”; “market research and public opinion polling services, technical analysis and testing services and advertising services”2. The prohibition relating to providing legal advisory services has a direct impact on the ability of EU lawyers to represent and assist Russian entities seeking advice on the applicability of EU Sanctions. The article also states the exceptions under which the aforementioned services can be provided, which include, inter alia3:
Some clarifications as to the ambit of the “legal advisory services” to which the prohibitions apply have previously been given at paragraph 19 of EU Regulation No. 833/2014, as amended. In effect, the EU Council sought to differentiate between advisory and litigation work, stating that legal advisory work, which covers “the provision of legal advice in non-contentious matters, including commercial transactions, involving the application or interpretation of law; participation with or on behalf of clients in commercial transactions, negotiations and other dealings with third parties; and preparation, execution and verification of legal documents” shall from now on be prohibited when aimed at legal persons or entities established in Russia. It further states that it does not include “any representation, advice, preparation of documents or verification of documents in the context of legal representation services, namely in matters or proceedings before administrative agencies, courts or other duly constituted official tribunals, or in arbitral or mediation proceedings”.
One important aspect of this demarcation is the precarious ground on which it stands. Being able to seek legal advice in any circumstances is ultimately guaranteeing access to justice, a principle that any EU institutions should uphold. In EU law, the notion of access to justice encompasses the right to a fair trial under Article 6 of the European Convention of Human Rights (ECHR) and Article 47 of the Charter of Fundamental Rights of the European Union (Article 47 of the CFREU), and the right to an effective remedy under Article 13 of the ECHR and Article 47 of the CFREU.
Article 5n of EU Regulation No. 833/2014 also mentions a list of derogations to the prohibitions available, inter alia, for humanitarian purposes, civil society activities, the functioning of EU diplomatic/consular representations in Russia or ensuring critical energy supply within the EU. It should be noted that these exceptions are to be interpreted strictly and are unlikely to benefit the work of EU lawyers.
The text raises many questions, one of them being its interpretation and the issues lawyers may face as a result, in particular with respect to the distinction between advisory work and contentious matters. Lawyers, therefore, may find it difficult to maintain a clear line between the activities which are permitted and the ones which are not. It is unfortunate that the members of a profession of court officers, whose role is essential to the preservation of the Rule of Law and to justice being properly rendered, seem to be viewed as a medium to help designated persons and persons associated with them circumvent applicable sanctions. This unfortunately substantiates the general distrust aimed against lawyers, who are too often associated in the public mindset with the deeds of the people they are tasked with advising or defending. On the contrary, a lawyer should be seen as an “intermediary” between the client and courts or authorities, assisting in the service of justice and being an essential part of the mechanism that maintains and monitors the implementation of the Rule of Law. Furthermore, it can be said that advisory services are often provided for the purpose of litigation and assistance on how sanctions apply - they should not be seen as solely advisory but also as ensuring correct application of the law.
The Commission Consolidated FAQs on the implementation of Council Regulation No. 833/2014 and Council Regulation No. 269/20141 (the FAQs) provide useful guidance on the various sectoral restrictions adopted by the EU, in particular on the provision of legal services. Importantly, the FAQs have confirmed that services provided to natural persons in Russia are not covered by the prohibitions; they only cover services provided to the Russian Government and to legal persons, entities or bodies established in Russia. It has also been clarified that they apply to non-Russian branches of Russian entities, which have no legal personality. However, they do not apply to entities that are not established in Russia, even if the parent company is, as long as those services would not benefit the latter. The exceptions also apply when the Russian entity is at least partly owned or controlled by a legal person, entity or body incorporated or constituted under the law of a Member State, country member of the EEA, Switzerland or a partner country (the UK, the US, Japan or South Korea).2 However, the question remains whether they apply in the situation where the entity is incorporated in the EU, but it is solely controlled or owned by a legal person established in Russia3. This goes to show the type of conundrums EU lawyers will be faced with and it puts into question the fairness of the contested measures given that the prohibitions have crossed the line from targeting entities which have a connection with the geopolitical situation to targeting entities based on the nationality of the ultimate client4. It is the authors’ opinion that this is a slippery slope which the EU should not undertake.
It is no surprise that this has prompted a strong reaction from EU lawyers given its controversial nature. Such provisions, in effect considerably limiting a person’s right to a lawyer, go against the immutable principle of the Rule of Law, which is at the foundation of EU law. To this effect, Article 47 CFREU guarantees the right to an effective remedy and to a fair trial and states that “everyone shall have the possibility of being advised, defended and represented”1 with no distinction being made between advisory and defence work. It is worth stressing here that the CFREU binds EU institutions and the Member States when they act within the scope of the EU law.
As a result, on 22nd December 2022, lawyers of the Paris and Brussels Bars, through the French association Avocats Ensemble (ACE), formally filed a challenge with the General Court of the CJEU to annul the provisions concerning the prohibition of tax consulting services and legal advisory services within Article 5n, paragraphs 1, 2, and 5 of EU Regulation No. 833/2014, as amended.2 The application was made pursuant to Article 263 of the Treaty of the Functioning of the European Union (TFEU)3. The latter allows applicants to file an action for annulment of an EU act based on a limited set of five arguments, namely: lack of competence of the EU institution that adopted the contested act, infringement of an essential procedural requirement, infringement of the Treaties, infringement of any rule of law relating to the application of the Treaties, and misuse of powers. Furthermore, the applicants are required to prove that they have standing to do so, meaning that the challenged act is of direct and individual concern to them. In this case, ACE submitted that EU jurisprudence allows for associations such as ACE, a syndicate recognised by the relevant national legal administrative authorities, to represent the interests of the legal profession and of its members before the General Court of the CJEU.
ACE based its challenge on three grounds:
It is hoped that the General Court of the CJEU will recognise the importance of this claim and will grant the partial annulment. In a state governed by the Rule of Law everyone should be granted access to legal services, even when it is only for advisory purposes.
Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.
Ruxandra works on international white-collar crime cases and other cross-border, high-stakes investigations. She is heavily involved in civil fraud matters, complex commercial litigation and cases where individuals are facing extradition.